Competition in Product Design: An Experiment Exploring Innovation Behavior

Cantner, Uwe; Güth, Werner; Nicklisch, Andreas; Weiland, Torsten

doi:10.2139/ssrn.1019224

“…This includes the different stages of economic development, i.e., the processes that connect the conception of 31 One single paper out of 754 cites Knight and recognizes the limitations of using ex ante calculable risk rather than genuine uncertainty to conceptualize potential innovative outcomes: Heertje (1995). Two papers cite either Knight or Kirzner as seminal contributions: Cantner et al (2009) and Sanders and Weitzel (2012), respectively.…”

Section: Discussionmentioning

confidence: 99%

“…These areCantner et al (2009) andHeertje (1995).Cantner et al only mention Knight (1921) as a seminal contribution. Heertje explicitly recognizes limitations in its theoretical neo-Schumpeterian framework with respect to the omission of genuine uncertainty.26 In line withKirzner (1973) the literature includes some discussions on entrepreneurial opportunity.…”

mentioning

confidence: 99%

To Be or Not to Be: The Entrepreneur in Endogenous Growth Theory

Henrekson

¹

,

Johansson

²

,

Karlsson

³

2021

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We examine the conceptualization of entrepreneurs in neo-Schumpeterian growth theory, which has reintroduced entrepreneurs into mainstream economics. Specifically, we analyze how neo-Schumpeterians relate to the contradiction between the entrepreneur-centered view of Schumpeter (1934) and the entrepreneurless framework of Schumpeter (1942), with the two frameworks entailing vastly different economic and policy implications. The analysis is based on a review of approximately 750 peer-reviewed articles over the period 1990-2018. The articles were identified using text mining methodology and supervised machine learning. The results show that the literature leans towards Schumpeter (1942); innovation returns are modeled as following an ex ante known probability distribution. By assuming that the outcomes of innovation activities are (probabilistically) deterministic, the Schumpeterian entrepreneur becomes redundant. In addition, the literature abstracts from genuine uncertainty, thus evading central issues regarding the economic function of the entrepreneur, especially with respect to disruptive innovations, ownership, and profits. To incorporate genuine uncertainty, the literature needs to adopt a broader conceptual foundation that goes beyond equilibrium modeling.

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Intellectual Property Rights Hinder Sequential Innovation -- Experimental Evidence

Brüggemann

¹

,

Crosetto

²

,

Meub

³

et al. 2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: In this paper we contribute to the discussion on whether intellectual property rights foster or hinder innovation by means of a laboratory experiment. We introduce a novel Scrabble-like creativity task that captures most essentialities of a sequential innovation process. We use this task to investigate the effects of intellectual property allowing subjects to assign license fees to their innovations. We find intellectual property to have an adversely effect on welfare as innovations become less frequent and less sophisticated. Communication among innovators is not able to prevent this detrimental effect. Introducing intellectual property results in more basic innovations and subjects fail to exploit the most valuable sequential innovation paths. Subjects act more self-reliant and non-optimally in order to avoid paying license fees. Our results suggest that granting intellectual property rights hinders innovations, especially for sectors characterized by a strong sequentiality in innovation processes. Terms of use: Documents in EconStor may Keywords IntroductionThe question whether society should grant intellectual property (IP) rights to innovators has been discussed widely in economics, law and politics. In this paper we contribute to the debate by means of a controlled real-effort laboratory experiment involving creativity. We introduce a novel design that allows us to create counterfactual situations and test directly the effects of IP rights on the innovation rate and welfare of a laboratory economy.The issues of what are the optimal extent and nature of IP rights have been long debated, but neither theoretical nor empirical research has provided a final answer. Theoretical results cut both ways. Conventional wisdom is largely derived from static models, and does not robustly survive in dynamic, sequential innovation models that best describe sectors characterized by cumulative research (Scotchmer 1991). The question of IP in dynamic, sequential models has been raised by several theoretical studies. They tend to offer a less positive view of the effect of IP on the rate of innovations and thus aggregate welfare. Green and Scotchmer (1995) study the division of profits between sequential innovators and suggest that it is desirable to minimize patent life. Moschini and Yerokhin (2008) In this paper we exploit the unique characteristic of laboratory experiments of allowing to easily build counterfactual situations while retaining control...

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Experimental Evidence on the Effects of Innovation Contests

Brüggemann

¹

,

Meub

²

2015

SSRN Journal

1

0

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Faculty of Economic Sciences, Chair of Economic Policy and SME Research, University of Goettingen, Platz der Goettinger Sieben 3, 37073 Goettingen, Germany Terms of use: Documents inAbstract: Economic research on innovation has long discussed which policy instruments best foster innovativeness in individuals and organizations. One of the instruments easily accessible to policy-makers is innovation contests; however, there is ambiguous empirical evidence concerning how such contests should be designed. Our experimental study provides evidence by analyzing the effects of two different innovation contests on subjects' innovativeness: a prize for the aggregate innovativeness and a prize for the best innovation. We implement a creative real effort task simulating a sequential innovation process, whereby subjects determine royalty fees for their created products, which also serve as a measure of cooperation. We find that both contest conditions reduce the willingness to cooperate between subjects compared to a benchmark condition without an innovation contest. However, the total innovation activity is not influenced by introducing innovation contest schemes. From a policy perspective, the implementation of state-subsidized innovation contests in addition to the existing intellectual property rights system should be questioned.

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Competition in Product Design: An Experiment Exploring Innovation Behavior

Cited by 3 publications

References 44 publications

To Be or Not to Be: The Entrepreneur in Endogenous Growth Theory

To Be or Not to Be: The Entrepreneur in Endogenous Growth Theory

Intellectual Property Rights Hinder Sequential Innovation -- Experimental Evidence

Experimental Evidence on the Effects of Innovation Contests

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